△Add friend and note "inspection" to register The golden era of foreign supermarkets in China has ended! After Walmart's consecutive store closures, it sought deep cooperation with JD.com, and Carrefour also aligned with Tencent and Yonghui. The world's top two global supermarket chains have both yielded to the Chinese market. What is the third waiting for? Recently, it was reported that Germany's Metro, once ranked third among global supermarket chains, is looking to "sell itself," with Fosun International in talks to acquire a stake in Metro's China business. Alibaba is also rumored to be a potential buyer! Metro, however, denies the "sale," stating it is "seeking local partners for cooperation." But whether it's a "sale" or "cooperation," Metro has caved. 1 After 23 Years in China, The Golden Generation of Foreign Investment Bows Out! Metro, Germany's largest supermarket and formerly Europe's second-largest and the world's third-largest retail wholesale supermarket, entered China in the 1990s, a golden period for foreign investment. In 1995, Metro partnered with Shanghai Jinjiang Group to officially enter China, becoming the first joint venture approved by the Chinese government to establish supermarket chains in the country. That same year, French retail giant Carrefour arrived in Beijing. Then, in 1996, Walmart set foot in Shenzhen; in 1997, Thailand's CP Group's Lotus entered Shanghai; in 1998, RT-Mart entered Shanghai; and in 1999, France's Auchan also entered Shanghai. However, over two decades later, foreign retailers staged a massive retreat. Spain's Dia also sold all its China stores to Suning in 2017, which then converted them into Suning Xiaodian stores. Now, Metro can no longer sit still. In 23 years in China, Metro has opened only 92 stores, while Carrefour and Walmart, which entered the market around the same time, have long surpassed several hundred stores each. 2 Revenue Down by Two-Thirds, Market Position at Risk Metro's "Three Strikes" Streak In 1964, Metro began its journey in warehouse supermarkets. After over 50 years of development, it became Germany's largest chain warehouse supermarket and one of Europe's largest. Starting in 1999, Metro ranked third among the world's top 100 retailers. In 2008, when the financial crisis hit Europe and the US, Metro achieved its highest-ever revenue of 65.529 billion euros. By 2017, Metro's revenue had fallen to around 22 billion euros, a decrease of two-thirds (approximately 430 billion yuan) from its peak. This decline includes factors such as store closures and business divestitures. But since reaching its revenue peak in 2008, Metro's business growth has severely slowed and begun to decline. In this competitive market, not advancing means retreating. In October 2015, Metro sold its domestic department store subsidiary Kaufhof for $3.2 billion. In 2017, Metro Group announced it would spin off its electronics and appliance retailers Saturn and MediaMarkt, to be managed separately by holding company Ceconomy. By this year, Metro's Germany-only supermarket chain Real has also been included in divestment plans. Metro's market position is already hard to maintain. Three Strikes How has Metro, retreating globally, fared in the Chinese market? To achieve revenue growth through business expansion, in 2010, Metro partnered with Foxconn to form a joint venture, introducing Media Markt, Europe's largest consumer electronics chain under Metro Group, to China. Metro and Media Markt founder Erich Kellerhals and his family jointly held 75% of Media Markt China, with Foxconn holding 25%. By early 2013, Media Markt had seven stores in China, all in Shanghai and its surrounding areas. However, due to late market entry and pressure from Suning and Gome, Media Markt had minimal room to survive and struggled to achieve profitability. Eventually, in 2013, Metro completely shut down its Media Markt business. In 2014, Metro made a new assessment of the Chinese market, believing that China's retail industry would focus more on small-format businesses, so it began experimenting with convenience stores. "Hemaijia," a convenience store brand Metro created specifically for the Chinese market, was listed as a key development focus, also starting in Shanghai and quickly launching a franchise model. By May 2016, Hemaijia stores began opening, with around 100-square-meter outlets offering fresh food, cooked food, convenience foods, and snacks, including Metro's private-label products and many other imported items. However, only four Hemaijia stores were opened, and by 2017, due to limited sales and rising rents, all four stores were closed. From the convenience store plan to full closure, it took only three years. The key point is that Shanghai has a high density of convenience stores, with the most openings from FamilyMart, followed by Lawson, Meiyijia, and numerous local brands like Kedi, Lianhua, Guangming, Liangyou, Haode, and Nonggongshang. According to Dianping data, in 2017, Shanghai had over 15 convenience store chains with more than 10,000 stores. It's easy to imagine the difficulty for Metro to compete with a new brand. Is the Asian market important to Metro? Metro's Asian store count ranks third, but Asian market revenue accounts for only a small portion of Metro's overall revenue. In the Chinese market, and even the entire Asian market, Metro's current situation is awkward. 3 Because of Positioning, Missing China's Opportunity Membership Model Doesn't Fit National Conditions Metro is a cash-and-carry supermarket (where professional customers select goods in a warehouse-style store, pay in cash, and take goods away), targeting professional customers. Compared to traditional delivery wholesalers, it offers advantages like immediate product availability and longer business hours. It positions itself for a "limited" customer base, only serving business operators and group consumers in industrial and commercial fields, such as units, corporate legal entities, or small retailers. Due to its wide product range, professional service, and competitive prices, cash-and-carry significantly reduces operating costs, giving it a long-term advantage in the B2B segment. But it is precisely this positioning that has made Metro's performance in the Chinese market less than stellar. B2B Only, Isolated from Mass Consumer Market What sets Metro apart from other supermarkets is its unique membership system, where only customers who apply and hold a "membership card" can enter and shop. More interestingly, based on its positioning, Metro's membership is only open to groups and institutional members like units, corporate legal entities, small retailers, and catering businesses. How to get a card? Unlike regular supermarkets where you just leave your name and phone number, at Metro, you need a unit organization with a business license copy or organization code certificate to apply. Later, individual applications were allowed, but they still required a certificate from the employer or community. Of course, individual consumers can enter to shop, but they need to fill out a temporary membership form, leave their name and phone number, and then enter. Even the temporary form has a barcode that cashiers scan at checkout. Why is this? The answer lies on Metro's shopping receipts. Metro's receipts are not ordinary ones but universal machine-printed invoices from the State Taxation Administration. This tax awareness is commendable, but for mass consumers, such an entry and shopping experience is too cumbersome. Metro, targeting "professional customers" for wholesale, brought a new business philosophy and model to the Chinese market, but to a large extent, the reason Metro hasn't developed as well as Walmart or Carrefour is also due to this positioning. "Professional customers" are a very niche group, and to a large extent, Metro's business direction determines that its customer base in a region is limited. At the same time, Chinese consumers' spending habits have weak concepts of "invoices" and "taxes," and "transparent invoicing" has made "reimbursement" and "kickbacks" a major "problem." Although individual consumers can now enter Metro, waiting for consumers in a region to change their habits is not a wise choice. After over 20 years in the Chinese market and venturing into e-commerce, there is still a long way to go before opening up to C-end consumers shows results. Consequences of "Big Store Turning Away Customers": Painful to Cut Losses, Hard to Grow Big After the convenience store failure, Metro refocused on hypermarkets. Not long ago, industry insiders said Metro's move made sense because Metro knows well that in its Chinese stores, most customers use company membership cards to buy personal items. That is, in the Chinese market, for supermarkets, C-end consumers are still the main spending group. How to connect to C-end through B-end? Metro's idea is to focus its core business direction on the welfare card business. This direction has huge potential, as data shows Chinese companies distribute around 400 billion yuan in employee benefits, but these are scattered across various complex channels without dedicated product design or category combinations. Currently, among domestic supermarkets, only Yonghui has developed the welfare card business as a main business. However, Metro faces a huge contradiction. In 23 years in China, Metro has only over 90 stores in the vast Chinese market. In contrast, Metro has about 900 stores in its home market of Germany. With Germany's land area of 357,021 square kilometers, the average distance from distribution centers to stores is less than 250 kilometers. In China, with fewer and scattered stores, the average delivery distance is several times that of Germany. Furthermore, what are the characteristics of Metro's store locations? The sales area exceeds 10,000 square meters, plus building area and parking area roughly equal to the building area, some even reaching 30,000 to 50,000 square meters. This is also one reason Metro cannot quickly expand in China: site selection is difficult, hard to choose locations in high-density population areas, and store density is extremely low. How to attract more individual consumers? At the same time, the current situation is that Metro's store count in China is the third highest among all countries and regions it operates in, but its revenue share is very small. High investment, low return, not cost-effective. Even now, with relaxed conditions for individual membership registration, non-members are still not allowed in. China's retail market is truly a mass consumer market, and Metro stands out as unconventional. Every market has its peculiarities. Without good localization, it will only become harder amid increasingly fierce competition and more market formats. The advantage of early entry into the Chinese market will also vanish with changes in the market environment. Walmart and Carrefour are good examples. Metro must make decisive decisions, upgrade and iterate its B-end business products, and quickly win over more individual consumers; otherwise, it will face tougher choices than Carrefour.
Source: Jin Cuo Dao Channel (ID: Diik)
10th B-end E-commerce Inspection - "From Products to Scenes" Event Dates: December 10-13 Event Locations: Wuhu, Nanjing, Changsha Event Schedule:
Morning of Dec 10: Visit Three Squirrels HQ + Snack Store
Afternoon of Dec 10: Visit Nanjing Squirrel Small Store
Evening of Dec 10: Visit Nanjing Master Gao Beer Workshop
Full day Dec 11: Nanjing-Changsha, or free arrangement
Morning of Dec 12: Community Group Buying Exchange Salon
Afternoon of Dec 12: Kaola Select Heroes League Launch
Evening of Dec 12 to Early Morning of Dec 13: On-site visit to Kaola Select Logistics Center - This period is the peak sorting time in the warehouse, allowing direct observation and learning of the backend operations of community group buying e-commerce Distributor friends interested are welcome to join us for understanding and on-site inspection: Organization Format 1. Expert Exchange Salon************2. Company Visit
- On-site Explanation
- One-on-One Communication************5. Actual Market Case Visit Friends who want to participate If interested in a specific day's content, you can register separately Long press this QR code or click "Read Original" to register with one click! Add friend and note your intention -END-